ExportWise - Fall 2008 - ExFiles: Exporting Success Stories
By Jennifer ChiuGenetiporc
Saint-Bernard, Quebec
Genetiporc will have foreign experience on its side when it makes its first investments in China and Ukraine later this year.
The Quebec-based business exports swine genetics used to breed healthy and high-quality pigs. President Christian Breton estimates that 75 per cent of Genetiporc’s business is done outside Canada, with the bulk of its annual sales of $96 million coming from the United States. The company is part of Aliments Breton Foods Canada, a conglomerate of agri-food businesses based in Quebec.
Canada is one of the top swine producers in the world, with 30 million live market hogs. Over the last decade, Canadian swine exports have grown an average five per cent a year. While the vast majority of exports go to the United States, companies like Genetiporc see new opportunities in emerging markets.
Genetiporc currently has commercial farms in the United States, Mexico and Brazil, with plans to expand to China and Ukraine in order to gain a foothold in Asia and Eastern Europe, where there is growing demand for swine and pork products.
In China, Genetiporc will invest $1.2 million in a new breeding farm as part of a joint venture. Company officials visited the country 10 times to gather market intelligence before making a decision on the facility. A recent
$3 million investment in Ukraine will be in the form of genetic breeding material, provided to a partner to set up a new operation.
“While Genetiporc has seen great success in North America, the risks are always higher when entering emerging markets,” says EDC Account Manager Jean-Francois Renaud. “They have to insure against many possible outcomes.”
“We were caught by the currency devaluation in Brazil in 1999 and our development stopped. It took years to overcome,” Breton adds. “There are also risks when setting up a facility in another country, such as being repossessed by government. We need to be more aggressive in protecting ourselves.”
Breton said EDC’s political risk insurance (PRI) may be ideal for these new investments. PRI protects overseas assets, such as equipment and manufacturing facilities, by insuring them against risks like expropriation, breach of contract and political violence.
In the past, Genetiporc has used EDC’s Export Guarantee Program and is currently considering other EDC financing services for its China and Ukraine investments.
While the opportunities in Asia and Eastern Europe are promising, Breton said the entire agri-food industry is facing new challenges at the moment, such as soaring grain prices and high fuel costs.
“The problem now is the high cost of feed. It’s already squeezing out some producers,” Breton said. “The price of pork is also going down, which in part affects the price of a live pig. Right now we’re seeing small improvements in prices, but we expect it to be better in 2009.”
Photo: Courtesy of Genetiporc
